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Venezuela pressures foreign partners on oil venture commitments: sources

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(Reuters) – Foreign partners of Venezuela’s PDVSA are facing pressure from the state-run oil firm to publicly declare whether they will continue as minority stakeholders in Orinoco Belt projects following U.S. sanctions, three people familiar with the matter said.

FILE PHOTO: The corporate logo of the state oil company PDVSA is seen at a gas station in Caracas, Venezuela, January 28, 2019. REUTERS/Andres Martinez Casares

The sanctions on Petroleos de Venezuela (PDVSA), imposed last month in an attempt to dislodge Venezuelan President Nicolas Maduro, barred access to U.S. financial networks and oil supplies for the PDVSA joint ventures, pressuring the nation’s already falling crude output and exports.

PDVSA’s Orinoco Belt joint venture partners, mostly U.S. or European companies, are facing difficulties getting cash-flow out of the country as a result of the sanctions, straining their ability to continue output and exports.

PDVSA has been in talks with the companies to persuade them to commit publicly to the joint ventures, the sources said in recent days.

PDVSA did not reply to a request for comment. On Monday, Venezuelan Oil Minister and PDVSA head Manuel Quevedo said on a visit to India that relations with international oil companies including Chevron were continuing.

France’s Total SA, Norway’s Equinor ASA, Russia’s Rosneft and U.S.-based Chevron hold minority stakes in joint ventures with PDVSA that produce crude and operate oil upgraders capable of converting the country’s extra-heavy oil into exportable grades.

The four crude upgraders are capable of converting up to 700,000 barrels per day. The oil is exported by the joint ventures and each partner receive its share of the exports.

Total believes it can stay in Venezuela, its Chief Executive Patrick Pouyanne said on Monday, although the firm last week said its bank accounts were blocked and it had evacuated its foreign employees.

Rosneft has continued working normally at its Petromonagas joint venture with PDVSA, according to the sources.

Equinor declined to comment on operational issues, referring questions to Petrocedeno, its joint venture with PDVSA.

Chevron’s operations in Venezuela are continuing, a spokesman said on Monday, reiterating that the company was committed “to the country’s energy development in compliance with all applicable laws and regulations.”

Even if the companies commit to Venezuela, their ability to produce could be crimped by the sanctions. PDVSA last week ordered Petrocedeno to halt oil production and upgrading, due to a lack of naphtha to dilute the extra-heavy crude, according to sources from the project.

The Petrocedeno-PDVSA venture’s 220,000-bpd upgrader was already out of service when the decision was made, one of the people said. It is unclear when oil output will be halted.

PDVSA is studying if the other joint ventures in the Orinoco will have to halt operations, with diluent supplies dwindling, the people said.

India’s Reliance and PDVSA’s U.S. unit Citgo Petroleum are the main suppliers of naphtha to Venezuela, according to internal PDVSA data. Those flows have declined since sanctions took effect on Jan. 28, according to Refinitiv Eikon data.

Reporting by Marianna Parraga in Mexico City and Deisy Buitrago in Caracas; additional reporting by Nerijus Adomaitis in Oslo, Editing by Rosalba O’Brien



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Oil prices dip as U.S. crude output hits record 12 million barrels per day

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SINGAPORE (Reuters) – Oil prices fell on Friday after the United States reported its crude output hit a record 12 million barrels per day (bpd), undermining efforts by Middle East dominated producer club OPEC to withhold supply and tighten global markets.

FILE PHOTO: A Canadian Natural Resources pump jack pumps oil out of the ground near Dorothy, Alberta, Canada, June 30, 2009. REUTERS/Todd Korol/File Photo

U.S. West Texas Intermediate (WTI) crude oil futures were at $56.85 per barrel at 0010 GMT, down 11 cents, or 0.2 percent, from their last settlement.

International Brent crude futures had yet to trade.

U.S. crude oil production reached 12 million barrels per day (bpd) for the first time last week, the Energy Information Administration (EIA) said on Thursday in a weekly report.

(GRAPHIC: U.S. oil production & storage levels – tmsnrt.rs/2Vanxza)

That means U.S. crude output has soared by almost 2.5 million bpd since the start of 2018, and by a whopping 5 million bpd since 2013. America is the only country to reach 12 million bpd of production.

As output surges, U.S. oil stocks are also rising.

U.S. commercial crude oil inventories rose by 3.7 million barrels in the week ending Feb. 15, to 454.5 million barrels, the EIA said.

Analysts say U.S. oil firms will export more oil to sell off surplus stocks.

“The continued surge in U.S. production stands as a bearish dynamic for market prices, especially as increasing volumes get sold abroad in a direct challenge to Saudi Arabia and Russia,” said John Kilduff, partner at Again Capital in New York.

For now, at least, the price dips have halted a rally that pushed crude to 2019 highs this week amid supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).

OPEC and some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million bpd to prevent a large supply overhang from growing.

Another price driver has been U.S. sanctions against oil exporters Iran and Venezuela.

Reporting by Henning Gloystein; Editing by Joseph Radford



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Asian shares tread water as investors watch trade talks

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SHANGHAI (Reuters) – Shares in Asia were flat in early trade on Friday following a fall on Wall Street, with a deteriorating global economic outlook outweighing more signs of progress in trade talks between China and the United States.

Market prices are reflected in a glass window at the Tokyo Stock Exchange (TSE) in Tokyo, Japan, February 6, 2018. REUTERS/Toru Hanai/File Photo

Early in the Asian trading day, MSCI’s broadest index of Asia-Pacific shares outside Japan was up less than 0.1 percent.

(Graphic: Asian stock markets: tmsnrt.rs/2zpUAr4)

Australian shares gained 0.5 percent and Japan’s Nikkei stock index was 0.3 percent lower.

Investors continue to closely watch high-level talks between U.S. and Chinese trade negotiators in Washington, with little more than a week left before a U.S.-imposed deadline for an agreement expires, triggering higher tariffs.

Reuters reported exclusively on Wednesday that the two sides were drafting language for six memorandums of understanding on proposed Chinese reforms, progress that had helped to lift investor sentiment.

But shares on Wall Street slumped Thursday, pulled down by new data showing weakness in U.S. business spending plans and factory activity.

The Dow Jones Industrial Average fell 0.4 percent to 25,850.63 points, the S&P 500 lost 0.37 percent to 2,774.28 and the Nasdaq Composite – which had climbed the previous eight sessions – dropped 0.4 percent to 7,459.06.

The U.S. Commerce Department said on Thursday that domestic orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.7 percent.

Moreover, the U.S. Mid-Atlantic factory sector fell into contraction territory in February for the first time since May 2016, data from the Philadelphia Federal Reserve showed.

“While global manufacturing is weak, services activity is looking more positive. But it is difficult to see manufacturing and services diverging for long,” analysts at ANZ said in a morning note.

“There are strong multiplier effects from manufacturing that imply downside risks to the services sector, particularly in Europe. And trade uncertainty, which is overhanging the manufacturing sector, needs to be resolved.”

The yield on benchmark 10-year Treasury notes edged lower to 2.686 percent Friday, compared with a U.S. close of 2.688 percent on Thursday as a bump from investor optimism about trade talks progress ebbed.

The two-year yield, watched as a gauge of expectations of higher Fed fund rates, eased to 2.5266 percent from a U.S. close of 2.529 percent.

The Australian dollar rebounded after tumbling Thursday on a Reuters report that China’s northern port of Dalian has placed an indefinite ban on imports of Australian coal. It was last up 0.3 percent at $0.7107.

The U.S. dollar was barely changed against the yen at 110.66, while the euro inched slightly higher to buy $1.1340.

The dollar index, which tracks the greenback against a basket of six major rivals, was steady at 96.586

U.S. crude dipped 0.25 percent at $56.82 a barrel.

Gold rebounded after falling more than 1 percent Thursday, with spot gold trading up about 0.1 percent at $1,324.92 per ounce. [GOL/]

Reporting by Andrew Galbraith; Additional reporting by Richard Leong in NEW YORK; Editing by Richard Borsuk



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QuadrigaCX’s inadvertent transfer due to ‘platform setting error’

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The court-appointed monitor overseeing the search for the roughly $260 million owed to clients of the embattled QuadrigaCX cryptocurrency exchange says the bitcoin transfer it “inadvertently” made this month was due to a “platform setting error” that prompted the automatic transaction.

Ernst & Young also said in its second report that it has confirmed that the insolvent company’s cold-storage wallets continue to hold approximately 104 bitcoins. It had said that 103 bitcoins had been transferred out on Feb. 6.

The report adds that the Vancouver-based company on Feb. 14 transferred bitcoin, litecoin and other cryptocurrencies over to cold-storage, or offline, wallets controlled by the court-appointed monitor.

The monitor says QuadrigaCX transferred roughly 51.1 bitcoins, 33.3 bitcoin cash, 2,032.7 in bitcoin gold, 822.3 litecoin and 951.5 ether, which will be held pending further order of the court.

The report also says that the cryptocurrency exchange, which was granted creditor protection and appointed a monitor earlier this month, has “no accessible funds” to fund its creditor protection proceedings and pay creditors other than interim financing “which will be exhausted in the near term.”

Ernst & Young says there are three immediate sources of funds available, such as bank drafts and money held by third-party processors, and the company and the monitor are taking steps to facilitate access.

This week, a Nova Scotia Supreme Court judge appointed Toronto law firm Miller Thomson along with the Halifax firm Cox & Palmer as representative counsel for 115,000 clients owed money.



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